When will Reuben be able to collect a debt that Shimon actually owed him from Levi?

As part of the previous column^[1] We have shown how it is possible, even as part of a preliminary arbitration proceeding, to impose a lien on Shimon's assets held by Levi, as part of a prior application to the court.^[2]

Is it always possible to do so? What are the conditions for obtaining a seizure order? Is the seizure order a means of pressure or collection?

 In this column, we will discuss the summary of the rules for obtaining a seizure order on the debtor's assets held by a third party.

As a general rule, the purpose of the foreclosure process is to assist in collecting the debt owed by the debtor to the creditor.

It is possible - in general - to distinguish between two types of foreclosures: those that ensure collection was And the plaintiff will win, and those who follow realize winning.

As a general rule, and there are exceptions, the enforcement framework is a framework that enforces a debtor to pay the creditor. Therefore, the foreclosures carried out within its framework are procedures for collecting an existing debt against someone who does not pay his debt to the creditor.

We will not discuss these in this column and will instead turn to those foreclosure procedures that will facilitate future collection., was And the plaintiff will win the case. That is, a preliminary procedure, in which a kind of sanctions are imposed on the potential debtor, which come to assist the potential winner should he win the case.

Is the foreclosure necessary?

The above-mentioned currency - potential for winning and not actually winning - to the extent that a lien is imposed on the assets of a potential debtor, this will likely cause him harm, where he is not necessarily a debtor, since not every claim ends with the plaintiff winning his claim. Therefore, it is up to the examiner of whether or not to grant the order - the judge - to examine to what extent the imposition of the lien is justified. That is, to likely cause the potential debtor harm, at an early stage and before it is determined that he is indeed a debtor.

Often, a plaintiff seeks to try to get the defendant to rush to pay him before the case is concluded, since the plaintiff knows that a legal hearing will take a long time and he believes - of course - that the defendant does indeed owe him one amount or another. Then, the plaintiff tries to put pressure on the defendant, in the form of the feasibility of pursuing the lawsuit in light of the damages he will suffer.

One of the significant pressures is the delay in money - or assets - that are due to the defendant from third parties, until the claim is clarified and a judgment is rendered, using the foreclosure tool. The plaintiff believes that the defendant will think twice about whether it is worth pursuing the claim in light of his damages, which could reach the point of his financial ruin due to the delay in payment by the third party.

For example, it would be difficult for a business that lives on its current cash flow to lose a certain amount - even temporarily, since the legal process in Israel is not short - given the need for what is known as ongoing "rollover.".

The legislature and legal jurisprudence have established a series of rules in order to prevent the collection tool in the form of a lien from becoming a tool that serves as a lever of pressure.

Since the enactment of the Basic Law "Human Dignity and Liberty", where the legislator recognized the right to property as a constitutional right, the courts have been more careful about violating the defendant's right, since the right or money that the plaintiff seeks to seize is certainly the defendant's property, as opposed to a claim - a right - that has not yet been clarified and it has not been determined that it actually exists for the plaintiff. Therefore, legal rule states that a seizure will not be granted in the usual way, but that a balance must be struck between the plaintiff's interest in succeeding and exercising his rights - to the extent that he is entitled to it - and the defendant's interest in preventing the violation of his property. Within the framework of this balance, the defendant is granted a superior status.

The court required to issue a seizure order will consider a number of considerations and, based on them, will determine whether or not the order will be issued.

The regulation states that the court must consider whether there is a reasonable concern that failure to issue the order will hinder the execution of the judgment.

Within this framework, the court will examine the amount of the claim, the defendant's financial ability - his financial strength - to pay the claim if he loses, the fear of asset smuggling, etc. All in the circumstances of each case.

The court must also consider whether there is prima facie evidence for the plaintiff's claim. In this context, the court examines a preliminary examination of the plaintiff's evidence. It should be emphasized that the court does not decide the case as a whole, but rather examines - based on the evidence before it at an early stage and usually without the defendant presenting its arguments - whether the plaintiff apparently has reliable evidence to prove his claim or not.

In a parenthetical article, it should be said that not everything that looks like a duck from a distance is actually a duck. Therefore, the plaintiff should not lose heart if he were not granted a seizure order in view of the quality of his evidence, just as the defendant should not lose heart if he were granted a seizure order against him in view of the apparent evidence, since there is no certainty, neither for one nor for the other.

Preventing Irregular Foreclosures - Financial Remedy and Remedy for Things in Kind

The foreclosure process is limited to claims in which only two remedies are sought - monetary relief and in-kind relief.

Usually, the seizure request - in order to prevent smuggling - that the hearing be held in the presence of one party. The court will issue a seizure order in the presence of one party only if it is convinced that if it were to do so, serious harm would be caused to the applicant. If this is not the case, it will hold a hearing on the application in the presence of both parties.

In order to prevent the imposition of futile foreclosures, as well as to indemnify the defendant in the event that it is determined that the foreclosure was unnecessary in general, and for this, there are several conditions, the person requesting the order is required to provide guarantees in the form of a self-commitment and a third-party undertaking to indemnify the defendant, as a precondition for granting the order.

If a temporary seizure order is issued in the presence of one party, the court is obligated to determine a judgment in the presence of both parties - to the extent that a request to cancel the order has been submitted - within 7 days from the date of submission of the request, in light of the above regarding the potential harm to the defendant and the balance between the interests of the defendant and those of the plaintiff.

In any case, the burden of proving the need for the order - whether in the presence of one party or in the hearing itself, to the extent that a request for its cancellation was filed, or if the order was not issued in the presence of one party in the first place and the request was discussed in the presence of both parties - lies with the applicant for the order - that is, the plaintiff.

What are the obligations imposed on a third party who owns the assets?

We will not go into detail without explaining what the obligations are imposed on the holder, the third party on whose assets the seizure order was imposed. First, it should be said that the holder generally has no interest in violating the order, since - in general - it can be said that he is happy to leave the assets with him for another period of time. However, since this is not always the case, the legislator established sanctions against a holder who violates the order, which essentially consist of imposing liability on the holder if he violates the order, to the extent of a sanction that amounts to paying the judgment debt in place of the debtor - who is no longer a defendant but has risen/descended to the status of a debtor - to the claimant who has become the winner.

In conclusion - The foreclosure tool is a significant and effective tool, but its use will be approved only to the extent that it is required and not merely for the purpose of exerting pressure.

Lawyer Zvi (Tsiki) Wolfson, is a managing partner atWolfson Weinstein & Co.', intern In commercial law Represents in commercial arbitrations, including before courts, and also serves as an arbitrator in various commercial disputes.

Join the Haredim 10 Facebook page >>

Join the X page of Haredim 10 >>

Want more news, videos and stories? Join the Haredim 10 WhatsApp channel >>